Question

Joshua, Rachel, and Daniel formed an LLC to manage their accounting business. Joshua contributed $20,000 to the LLC. Rachel and Daniel contributed $40,000 each. A year later, the LLC needed capital injection and Joshua lent a credit of $50,000. However, nothing could save the LLC and it entered bankruptcy and was dissolved. Joshua was the only creditor of the LLC. If a total of $50,000 was obtained after the sale of all the assets of the dissolved LLC, how much will Rachel get

Answer 1

Answer: Rachael gets nothing.

Explanation:

According to the Revised Uniform Limited Liability Company Act (RULLCA), when all the assets of a limited liability company have been sold, the money gotten from the sale will have to be distributed first to the creditors of the limited liability company.

From the question, we are informed that Joshua gave the limited liability company $50,000 and we are further told that the sale of assets was $50,000 after the LLC was dissolved.

This means Joshua will get his $50,000 and there'll be nothing left which simply means that Rachael gets nothing.